New Expense Reimbursement Requirements For Illinois Employers

Illinois employers will have a new headache this new year, because as of January 1, 2019, they must reimburse employees for all “necessary expenditures and losses” incurred within the scope of their employment. This August, the Illinois Wage Payment and Collection Act changed to specifically include an expense and loss reimbursement requirement.

The amendment includes several limitations and protections for employers — among them:

The employer must “authorize or require” the expense;

The request for reimbursement must be submitted within 30 calendar days after incurring the expense;

The request must be supported by documentation (if documentation is nonexistent, missing, or lost the employee is permitted to submit a signed statement attesting to the expense).

In a nod towards employers, the amendment provides that if the employer has an established written expense reimbursement policy, employees who fail to comply with the policy forfeit the right to reimbursement. Further benefiting employers, and acknowledging the existence of federal regulations relating to expense reimbursement (e.g. the IRS Code), the amendment states it shall be interpreted to be consistent with federal regulations.

Left unaddressed by the amendment are a multitude of questions:

For example, will employers who have Bring Your Own Device (BYOD) policies be obligated to reimburse employees for the costs of these devices (personal cell phones, laptops, tablets)? Given longstanding IRS regulations regarding the use of personal automobiles, these regulations may be adopted and applied to the use of personal devices.

The prevalence of telecommuting or use of home offices may also create reimbursement requirements. Treatment of utilities, taxes, and insurance, among other expenses are not addressed.

Other typical employer requirements not mentioned include safety shoes and safety lenses, and environmental requirements such as foul weather gear. Likewise tools used by journeymen in skill trades positions are not addressed. Historically employees in these positions have been required to provide their own tools.

Another area fraught with open issues is the requirement to reimburse employees for “losses.” Reimbursement is not required if the loss is due to the employee’s own negligence, normal wear or losses due to theft. Determining whether a loss has occurred, and whether the loss was incurred within the scope of the employee’s job duties may prove difficult.

The Department of Labor (DOL) is tasked with issuing regulations. Employers should follow the DOL website carefully and engage with state and local trade organizations (like the Chamber of Commerce) to clarify these questions during the regulatory process. One thing is for sure, employers should anticipate an uptick in class action claims alleging a violation of the reimbursement requirements in the Illinois Wage Payment and Collection Act. As such, we recommend reviewing your expense reimbursement policies carefully to ensure they are wholly complaint on their face so as not to be as susceptible to class claims.

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